Ousted party in Iceland looks set for resurrection
Chairman of Iceland’s Independence Party Bjarni Benediktsson. Iceland’s recovery from economic collapse is much weaker than the government proclaims, and a major debt writedown will be needed before crippling currency controls can be lifted, the country’s likely next leaders told Reuters. Photograph: Reuters/Balazs Koranyi
Icelanders go to the polls on Saturday. The outcome of their second general election since the financial collapse of 2008 will be of interest to many.
Beyond the shores of the small island nation, few will have more interest than Fianna Fáil, whose near-identical twin party is set to return to power.
Ireland and Iceland have a great deal in common: geographically, historically, economically and politically. The two north Atlantic island states both gained independence in the 20th century after aeons in the shadow of larger powers. In the early years of this century, both experienced huge finance-fuelled bubbles before suffering two of the worst crashes in modern economic history. The two were then joined in the ignominy of International Monetary Fund bailout.
If their similar economic woes in recent times are well-known, their shared political conservatism is less widely understood. Comparing the two, Icelandic academic Thor Gylfason described Ireland and Iceland recently as “among the most inertia-driven and inward-looking western European societies”.
Nothing illustratesthis innate conservatism better than the extraordinary similarities between the centre-right Independence Party led by Bjarni Benediktsson and Fianna Fáil.
Until the crash, the IP had garnered more votes than any other party in every election for more than half a century. It was the only centre-right political party in Europe apart from FF to have enjoyed such a long period of dominance. It achieved this despite a reputation – familiar-sounding to Irish ears – for cosiness with business elites that sometimes crossed the line to plain cronyism.
But as long as the IP appeared to deliver prosperity, it remained the most popular party. Just as FF was returned to office in May 2007 before the crisis erupted, the IP won re-election just two weeks earlier.
But the collapse of the north Atlantic’s two bubble economies brought unprecedented political change. In the 2009 election, the party lost its decades-long top-spot position with voters and was ejected from power, the same fate FF suffered a year later.
Four years on, opinion polls show that if the IP doesn’t come out on top on Saturday, it will be second place. It is nearly certain to return to government and may well take back the prime minister’s office.
This might surprise readers given that most news from the island in recent times has pointed to a government successfully driving economic recovery. Beware the spin.
Over the past couple of years, Iceland’s first-ever left-of-centre government has been as successful as the current Irish administration in selling its story of recovery around the world. While the two countries have indeed made significant progress, if not always in the same ways, conditions on the ground are still grim, here and there.
While Iceland has managed to replace many of the jobs lost in the crash, household indebtedness is more crushing than in Ireland, rampant inflation is only now being brought under control and citizens are still strictly limited in the amount of foreign currency they can obtain.
If the centre-right is about to sweep back to power, the centre-left incumbents have themselves to blame for much of their lost support. Martin Koehring, an Iceland expert at the Economist Intelligence Unit, says that infighting in the coalition parties and defections of parliamentarians have weakened its authority and given it the appearance of amateurishness.
But this has not been all good news for the IP. Distrust of the political class has led to fragmentation of the vote. New parties have proliferated and it is they, rather than the IP, who have taken support from the government parties.
Despite this, at least one in four voters is expected to back the IP on Saturday, enough to all but guarantee a return to government. If FF emulates its closest political cousin, it will be back in power by 2016.